After yesterday’s release of the weak US macro-economic statistics, the USD fell in the market by the end of the trading day. It became known that retail sales in August fell, as well as industrial production, showing slowdown of economic growth in the country.
US retail sales and industrial production for August, manufacturing PMI for September and the producer price index were below the forecast. The weak data has raised doubts in the financial market that the U.S. economy is strong enough to cope with rise in the key interest rates in the coming months.
According to the futures for the Fed interest rate, probability of a rate hike was only 12% on Thursday versus 15% on Wednesday. Probability of a rate hike in December is 46% (against 54 percent a day earlier). It is likely that the Fed will not raise rates at the next meeting, leaving this chance for the meeting in December.
Major US stock indices sharply rose yesterday due to the decrease in expectation of the rate hike in the United States. Volatility has returned to the stock market. The index Dow Jones Industrial Average rose 1%, Nasdaq Composite by 1.5%, S&P500 by 1%, index Nasdaq100, which includes 100 largest U.S. and international nonfinancial companies listed on the Nasdaq stock exchange, has grown by 1.7% on Thursday and closed trading near the level of 4814.0.
Volatility in the bond markets has also increased. The yield on 10-year Treasury securities has grown to 1.703% against 1.689% on Wednesday.
However, on Friday with the opening of the trading day the USD has regained its positions in the market, and the stock indices in the world are slightly declining.
Today, some US data will be released as follows: at 15:30 (GMT+3) - consumer price index, which is the most important inflation indicator. It is expected that the index will increase by 1.0% in August (against +0.8% in July) that will be favourable for the USD. At 17:00 preliminary index of consumer confidence Reuters/Michigan for September will become known. Since 2011, the index has been in the uptrend. According to the forecast the index will be at the level of 91.0 (against 89.8 in August), which will also support the USD.